AT&T and T-Mobile create biggest US firm in $39bn deal

 

The combined mobile phone company would knock Verizon Wireless off the top spot in the US 

Deutsche Telekom has sold T-Mobile USA to rival AT&T for $39bn (£24bn), creating the largest US wireless network.

The deal sent Deutsche Telekom's shares to their biggest daily gain yet, and gives AT&T about 43% of the US mobile market.
The deal still needs approval from regulators.
It also gives the German telecoms giant the cash to buy backs shares and pay dividends.
Shares in Deutsche Telekom initially gained 16.3%, before slipping back to 10.79 euros a share - a 12.6% rise.
Deutsche Telekom said it would pay 3.4bn euros ($4.8bn; £3bn) in dividends between 2010 and 2012, pay down debt and spend 5bn euros on share buybacks in the three years after the deal.
AT&T will pay $25bn in cash and the rest in stock, while Deutsche Telekom will retain an 8% stake in the US carrier.
The deal means that AT&T is effectively about spending more than $1,000 per T-Mobile customer to overtake the industry leader Verizon Wireless.
Regulatory approval AT&T has been looking to increase its network capacity to handle the rapidly increasing consumer demand for videos and data.
However, analysts said that the deal may prove controversial.
Consumer rights group Public Knowledge said that the deal would lead to "higher prices, fewer choices, less innovation".
US carrier Sprint also voiced their concerns about the size of the combined company.
The phone companies countered that the US market was competitive and call prices had declined in recent years as a result.
AT&T said regulators may ask it to sell some assets as a condition for approval.
It said it expects the deal to be completed in 12 months.
AT&T chief executive Randall Stephenson told reporters the company had done its homework on the regulatory side of things.
"This is a unique opportunity," Mr Stephenson said.
"It's rare you have transactions where the synergies are greater than the price paid."

T-Mobile users in the Us will still not get access to the iPhone 4

iPhone advantage Mr Stephenson took over as chief executive in 2007.
The same year, AT&T began selling Apple iPhones, and wireless data has since become one of its fastest growing services driving revenues up.
AT&T lost its exclusive rights to carry the iPhone in US this year when Verizon Wireless began selling its own version of the device.
T-Mobile has reported falling earnings after missing out on the iPhone and failing to build a higher-speed wireless network.
The T-Mobile deal would be a way for AT&T to boost earnings by combining operations.
But its users will not get access to the latest incarnation of the iPhone, T-Mobile said on its website. "T-Mobile USA remains an independent company. We do not offer the iPhone," the company said.
The company is estimating that it could generate savings of more than $40bn.